According to today’s tax laws, when a policy is transferred down the family tree (the most typical scenarios are parent to child or grand-parent to grand-child) with no compensation for the transfer, this can happen tax free.
If you transfer your Whole Life policy to a third party, it will probably be considered a full disposition, and most likely will trigger a taxable event.
The definition of child is broad for tax purposes and can be applied in modified circumstances. It is recommended to consult your insurance advisor and a tax professional to confirm before taking any action.
The “Absolute Assignment” is a key component of the “Cascading Life Insurance” concept.